How do i use the screw tool in blender 2.8
It seems to work the same as before, even though it is not as of yet listed in any menus, so you need to enter "screw" into the Search Menu to run it. 

You can use open or closed geometry in it. The lose edge on the right side is a guide vector that the algorithm uses to guide the direction and length of the extrusion. The structures created by the guide are supposed to be deleted manually after the operation.

The 3D Cursors location is where the transforms pivot gets placed

You can override these settings from the Operator Panel (F6)

I do get the error you mentioned, when I set the axis values to 0, but the operation still does its job afterwards.